Waud Forms LTAC Alliance –

Lake Forest, Ill.-based Waud Capital Partners LLC recently partnered with Rod Laughlin, founder of Transitional Hospitals Corp., to form Regency Hospital Co. LLC, which will develop and manage long-term acute care (LTAC) hospitals throughout the U.S. Terms of the transaction were undisclosed.

The partnership was initiated by a mutual friend, Laughlin recalled, and ensuing conversations between the parties eventually resulted in Waud Capital becoming an investor in the business.

“We think this is one of the best management teams in the industry, and we’re very, very excited,” said Reeve Waud, a managing partner at Waud Capital.

LTAC hospitals specialize in treating certain types of critically ill patients for an extended period of time at a lower cost than traditional short-term acute care hospitals. However, unlike many LTAC hospitals, Regency will operate its facilities within existing general acute care hospitals, which will result in lower operating costs over freestanding facilities.

Waud Capital is banking on Laughlin’s track record, as well as changes in demographics and advances in medical technology in the health-care industry to drive its deal flow. “The market will only continue to grow with changes in demographics and advances in medical technology,” Waud said. “For efficient LTAC operators, this represents a substantial opportunity.”

Laughlin previously spearheaded Transitional Hospitals Corp.’s growth to 19 locations before selling the company in 1997 to Vencor Inc. for $639 million. Newly formed Regency Hospital Co., which is located in Alpharetta, Ga., plans to develop 25 long-term acute care hospitals nationwide and is opening its first facility in Florence, S.C. next month.

Waud Capital is no stranger to the health-care industry, having acquired Medical Holdings Inc., which is a supplier of medical products and services to individuals affected by spinal cord injuries, and add-ons The David L. Bowman Co. and Professional Medical Services.

As further evidence of health care being en vogue Merrill Lynch & Co. is reportedly raising a $1 billion health-care oriented buyout fund while Lake Forest, Ill.-based RoundTable is raising a similar $300 million fund. Partners at RoundTable declined to comment on the fund raising, noting that the firm is in a “quiet period.”